WebMD Health (WBMD) 8-K WebMD Reports Fourth Quarter and Full Year 2016 Financial Results

Exhibit 99.2

WEBMD HEALTH CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data, unaudited)

	Three Months Ended				Years Ended
	December 31,				December 31,
	2016		2015		2016		2015
Revenue	$	207,472	$	192,129	$	705,046	$	636,399
Cost of operations		72,895		69,475		266,654		247,311
Sales and marketing		41,328		40,129		145,962		138,025
General and administrative		23,397		24,183		91,141		91,580
Depreciation and amortization		7,721		7,418		30,792		30,521
Interest income		938		15		2,545		51
Interest expense		7,066		5,099		24,496		23,123
Loss on convertible notes		—		—		—		2,058
Gain on investments		—		—		—		139
Other expense		—		—		1,712		4,100
Income before income tax provision		56,003		45,840		146,834		99,871
Income tax provision		19,815		18,379		55,530		35,847
Net income	$	36,188	$	27,461	$	91,304	$	64,024
Net income per common share:
Basic	$	0.95	$	0.75	$	2.41	$	1.75
Diluted	$	0.73	$	0.60	$	1.97	$	1.48
Weighted-average shares outstanding used in computing income per common share:
Basic		38,006		36,583		37,854		36,600
Diluted		55,211		51,338		54,179		52,653

WEBMD HEALTH CORP.

CONSOLIDATED SUPPLEMENTAL FINANCIAL INFORMATION

(In thousands, unaudited)

	Three Months Ended						Years Ended
	December 31,						December 31,
	2016			2015			2016			2015
Revenue
Advertising and sponsorship
Biopharma and medical device	$	132,166		$	119,528		$	428,519		$	371,220
OTC, CPG and other		38,847			38,758			132,754			127,805
		171,013			158,286			561,273			499,025
Health services		28,803			27,218			113,937			110,441
Information services		7,656			6,625			29,836			26,933
	$	207,472		$	192,129		$	705,046		$	636,399
Net income	$	36,188		$	27,461		$	91,304		$	64,024
Interest, taxes,non-cash and other items (a)
Interest income		(938	)		(15	)		(2,545	)		(51	)
Interest expense		7,066			5,099			24,496			23,123
Income tax provision		19,815			18,379			55,530			35,847
Depreciation and amortization		7,721			7,418			30,792			30,521
Non-cash stock-based compensation		8,291			9,012			29,329			33,743
Loss on convertible notes		—			—			—			2,058
Gain on investments		—			—			—			(139	)
Other expense		—			—			1,712			4,100
Earnings before interest, taxes,non-cash and other items (“Adjusted EBITDA”) (b)	$	78,143		$	67,354		$	230,618		$	193,226

(a) Reconciliation of net income to Adjusted EBITDA.

(b) See AnnexA-Explanation ofNon-GAAP Financial Measures.

WEBMD HEALTH CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	December 31,
	2016		2015
	(unaudited)
Assets
Cash and cash equivalents	$	492,424	$	641,165
Accounts receivable, net		179,454		174,313
Investments		498,500		—
Prepaid expenses and other current assets		15,294		18,998
Total current assets		1,185,672		834,476
Property and equipment, net		83,296		81,027
Goodwill		202,980		202,980
Intangible assets, net		7,774		10,894
Deferred tax assets, net		14,544		15,694
Other assets		6,920		10,852
Total Assets	$	1,501,186	$	1,155,923
Liabilities and Stockholders’ Equity
Accrued expenses	$	78,597	$	80,664
Deferred revenue		105,310		102,715
2.25% convertible notes due 2016, net		—		102,523
Total current liabilities		183,907		285,902
2.50% convertible notes due 2018, net		398,066		396,281
1.50% convertible notes due 2020, net		295,432		294,266
2.625% convertible notes due 2023, net		351,190		—
Other long-term liabilities		28,731		23,246
Stockholders’ equity		243,860		156,228
Total Liabilities and Stockholders’ Equity	$	1,501,186	$	1,155,923

WEBMD HEALTH CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

	Years Ended
	December 31,
	2016			2015
Cash flows from operating activities:
Net income	$	91,304		$	64,024
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		30,792			30,521
Non-cash interest, net		3,906			4,172
Non-cash stock-based compensation		29,329			33,743
Deferred income taxes		1,083			(7,713	)
Loss on convertible notes		—			2,058
Gain on investments		—			(139	)
Changes in operating assets and liabilities:
Accounts receivable		(5,141	)		(37,507	)
Prepaid expenses and other, net		4,039			(4,132	)
Accrued expenses and other long-term liabilities		3,246			9,606
Deferred revenue		2,595			12,930
Net cash provided by operating activities		161,153			107,563
Cash flows from investing activities:
Purchases of property and equipment		(29,785	)		(48,372	)
Purchases of investments		(1,446,410	)		—
Maturity of investments		948,078			139
Partial redemption of cost-method investment		2,599			—
Net cash used in investing activities		(525,518	)		(48,233	)
Cash flows from financing activities:
Proceeds from exercise of stock options		65,309			21,939
Cash used for withholding taxes due on stock-based awards		(17,599	)		(6,438	)
Net proceeds from issuance of convertible notes		350,394			—
Maturity of convertible notes		(102,682	)		(151,038	)
Repurchase of shares through tender offers		(110,413	)		—
Purchases of treasury stock		(23,643	)		(28,406	)
Excess tax benefit on stock-based awards		54,258			39,002
Net cash provided by (used in) financing activities		215,624			(124,941	)
Net decrease in cash and cash equivalents		(148,741	)		(65,611	)
Cash and cash equivalents at beginning of period		641,165			706,776
Cash and cash equivalents at end of period	$	492,424		$	641,165

WEBMD HEALTH CORP.

NET INCOME PER COMMON SHARE

(In thousands, except per share data, unaudited)

	Three Months Ended				Years Ended
	December 31,				December 31,
	2016		2015		2016		2015
Numerator:
Net income – Basic	$	36,188	$	27,461	$	91,304	$	64,024
Interest expense on 1.50% convertible notes, net of tax		878		864		3,513		3,456
Interest expense on 2.50% convertible notes, net of tax		1,827		1,797		7,307		7,189
Interest expense on 2.25% convertible notes, net of tax		—		449		457		3,460
Interest expense on 2.625% convertible notes, net of tax		1,676		—		3,911		—
Net income – Diluted	$	40,569	$	30,571	$	106,492	$	78,129
Denominator:
Weighted-average shares – Basic		38,006		36,583		37,854		36,600
Stock options and restricted stock		1,158		1,427		1,658		1,412
1.50% convertible notes		5,699		5,694		5,695		5,694
2.50% convertible notes		6,210		6,205		6,206		6,205
2.25% convertible notes		—		1,429		353		2,742
2.625% convertible notes		4,138		—		2,413		—
Adjusted weighted-average shares after assumed conversions – Diluted		55,211		51,338		54,179		52,653
Net income per common share:
Basic	$	0.95	$	0.75	$	2.41	$	1.75
Diluted	$	0.73	$	0.60	$	1.97	$	1.48